Oil and Natural Gas in Chad

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  • Oil production: 225,000 bbl/day (2005 est.)
  • Oil proved reserves: 2 billion bbl (2005)
A 1,000 km pipeline carries oil from Kome in southern Chad's Doba Basin to the Atlantic coast of neighbouring Cameroon. The pipeline transfers 225,000 bpd of oil and is a joint venture between US oil giants ExxonMobil (which holds 40 % of the private equity) and Chevron (25 %), and Malaysia's state oil company Petronas (35 %).

Source: MSNBC

Chad became a net petroleum exporter after the Chad-Cameroon pipeline came online in 2003. Industry experts still consider Chad under-explored, and future oil discoveries could increase petroleum exports even more. In June 2004, members of the Doba consortium were awarded four new exploration permits in the Chari, Doseo, and Salamat basins, north of Lake Chad, according to EIA. Chad also has oil reserves in the Sedigi field in the Lake Chad Basin. Development of the Sedigi field was planned in conjunction with proposals for a petroleum refinery and power plant in N'djamena - which was to reduce Chad's domestic petroleum costs - but has been delayed.
International oil companies first discovered oil in the early 1970s in southern Chad in the Doba and Lake Chad basins. In 2001, the CCPDP consortium began test drilling in the Doba basin in Chad. In October 2003, first oil from Doba basin arrived at the port of Kribi. Oil from the CCPDP is produced primarily from three major fields, which include Bolobo, Komé and Miandoun. The smaller Nya field began producing through the CCPDP infrastructure in 2005, and the Moundouli field startedl producing through the CCPDP infrastructure in early 2007.According to Oil and Gas Journal (OGJ), Chad had proven oil reserves of 1.5 billion barrels as of January 2006. In 2006, Chad produced approximately 170,000 barrels per day (bbl/d) of oil. Oil exported from landlocked Chad is transported via the Chad-Cameroon pipeline, which ends at Cameroon’s Kribi terminal.
In July 2006, the Chadian government created the country’s first national oil company (NOC), which is called the Société des Hydrocarbures du Tchad (SHT). As a result of SHT, Chad has indicated a desire to control 60 percent of the country’s oil sector. In August 2006, Chad’s Oil Minister, Mahamat Nasser Hassane, announced the possibility of revising a previous agreement with the ExxonMobil-led consortium, which controls the Chad Cameroon Pipeline Development Project (CCPDP). The revision would allow SHT to become the fourth member of the consortium. Also in August, the Chadian government issued a statement in which Petronas and Chevron were accused of not paying enough oil-profit tax due to a tax advantage agreement signed in 2000. The companies, which together control 60 percent of Chad’s oil sector, are partners in the CCPDP with ExxonMobil. After concluding negotiations, the two companies agreed in October 2006, to pay outstanding taxes for 2005 and 2006 totaling $289 million. The tax payment will allow both companies to continue working in Chad. Major companies active in Chad include ExxonMobil, Chevron, Petronas, Total, Shell, and Perenco.
  • In December 2004, the Chadian government awarded oil exploration permits to Canada’s Energem Petroleum Corporation Ltd. The permits are for the Chari-Ouest basin, located near the Doba basin and Largeau basin, in central and northern Chad, respectively.
  • In July 2006, Chad’s Oil Minister stated that the Chadian government has a target of releasing 20 oil blocks for bid in 2007. Chad hopes the new exploration will lead to increased production capacity of 400,000 bbl/d by 2010.
Since Chad is landlocked, the country’s petroleum production depends on its ability to access international markets through the Chad-Cameroon pipeline project , which was completed in October 2004. The pipeline runs 670 miles from Doba basin through Cameroon’s Logone Birni basin to the port of Kribi. Eighty-five percent of the pipeline is located in Cameroon. The pipeline’s capacity is estimated at 225,000 bbl/d. Export facilities in Kribi include an onshore-pressure reducing station and a subsea pipeline connected to a floating production storage and offloading vessel (FPSO). The Tchad Oil Transport Company (TOTCO) and the Cameroon Oil Transport Company (COTCO) have respective ownership of each country’s portion of the pipeline.
Developers spent $3.5 billion to construct the Chad-Cameroon pipeline and export facilities. The World Bank’s approval of the project, a prerequisite for a $93 million loan to fund each country’s government stake in the project, was essential in securing the support of outside countries. Chad was the first country to accept a conditional loan from the World Bank based on oil-revenue spending restrictions. The country’s Petroleum Revenues Management Law (PRML), adopted in 1999 as a prerequisite for World Bank financing, outlined the planned allocation of new oil revenues. Eighty percent of Chad’s oil revenues were to be allocated to health, education, rural development, environmental concerns, and other social services. The remaining 20 percent was to be divided between government expenditures (15 percent) and a supplement to the Doba region (5 percent). During the first ten years of petroleum exports, Chad is expected to receive $3.5 billion in oil revenues, which will increase annual government revenues by more than 50 percent. Cameroon will earn an estimated 46 cents on every barrel of oil transported through the pipeline.
In January 2006, a dispute between the Chadian government and the World Bank occurred over the PRML. The Chadian government voted to allow additional oil revenues (surpassing the original 20 percent agreed to with the World Bank) to be allocated to the general budget. In response, the World Bank suspended loans to Chad and froze the country’s oil revenue accounts. After months of stalemate, and threats by the Chadian Oil Ministry to shutdown oil production, the two sides reached a compromise in July, with Chad committing 70 percent of revenues towards development programs. Chad can use the remaining 30 percent for government expenditures.

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